Bond Market Turmoil: Historic Collapse and Surging Borrowing Costs

The sell-off in Treasury bonds, particularly those with maturities of 10 years or more, has reached historic levels, with losses of 46% since March 2020. This surpasses the losses seen in the stock market during the dot-com bubble burst and is even worse than the bond market crash of 1981. The aggressive turn towards monetary tightening by the Federal Reserve, concerns about rebounding inflation, and a surge in Treasury issuance have all contributed to the bond market rout. Investors, including Bill Ackman, Ray Dalio, and Bill Gross, anticipate the 10-year yield hitting 5% in the near future.